Local job growth is one of the most important factors to study when assessing a market's prospects. Omaha, for example, which has attracted employers such as Yahoo! (YHOO) and Google (GOOG), missed out on the boom but is likewise dodging the bust. With the city adding jobs, the prospects for home prices look good. Detroit, where home prices fell by a third from 2003 through 2008, is likely to suffer even more in coming years as the auto sector continues to shrink. Demographic change, another trend examined here, is equally influential. For instance, Salt Lake City's youthful population is primed for house buying. While the bust left prices in once-bubbly Western markets such as Phoenix and Vegas lower in 2008 than in 2003, Salt Lake prices rose 51% over that period.

Fortunately for Mormons plenty of neighboring states have cheap housing. But will they so develop some cities and drive up housing prices that Mormons in those cities will shift leftward politically?

Using data collected in 1929 by the Conference Board and the Bureau of Labor Statistics, Cole and Ohanian were able to establish average wages and prices across a range of industries just prior to the Depression. By adjusting for annual increases in productivity, they were able to use the 1929 benchmark to figure out what prices and wages would have been during every year of the Depression had Roosevelt's policies not gone into effect. They then compared those figures with actual prices and wages as reflected in the Conference Board data.

In the three years following the implementation of Roosevelt's policies, wages in 11 key industries averaged 25 percent higher than they otherwise would have done, the economists calculate. But unemployment was also 25 percent higher than it should have been, given gains in productivity.

Meanwhile, prices across 19 industries averaged 23 percent above where they should have been, given the state of the economy. With goods and services that much harder for consumers to afford, demand stalled and the gross national product floundered at 27 percent below where it otherwise might have been.

"High wages and high prices in an economic slump run contrary to everything we know about market forces in economic downturns," Ohanian said. "As we've seen in the past several years, salaries and prices fall when unemployment is high. By artificially inflating both, the New Deal policies short-circuited the market's self-correcting forces."

The policies were contained in the National Industrial Recovery Act (NIRA), which exempted industries from antitrust prosecution if they agreed to enter into collective bargaining agreements that significantly raised wages. Because protection from antitrust prosecution all but ensured higher prices for goods and services, a wide range of industries took the bait, Cole and Ohanian found. By 1934 more than 500 industries, which accounted for nearly 80 percent of private, non-agricultural employment, had entered into the collective bargaining agreements called for under NIRA.

Cole and Ohanian calculate that NIRA and its aftermath account for 60 percent of the weak recovery. Without the policies, they contend that the Depression would have ended in 1936 instead of the year when they believe the slump actually ended: 1943.

This is not an original argument. While it has been many years since I read Murray Rothbard's book The Great Depression my memory of it is that he made a very similar argument. The argument seems plausible to me. When the money supply collapsed from widespread bank failures what was needed was a decline in wages and prices to a clearing level point where the amount of money and prices of goods and services matched up. Instead FDR's Administration intervened to prevent the meeting of supply and demand.

The 1930s era was still the economic dark ages. Milton Friedman and Anna Jacobson Schwartz
hadn't yet published their epic Monetary History of the United States, 1867-1960 (they had to wait till after 1960 to publish it in order for the title to make sense). So economic policy makers didn't have a monetary theory capable of explaining what was happening. FDR's policies were akin to bleeding a patient to help recover from a severe infection. Today of course we look down on the doctors who bled patients. But we still build monuments to honor political leaders who pursued disastrous economic policies based on nothing more than primitive superstitions. The lesson? If you want to be a quack and have a great great reputation decades after you've passed from center stage then you are better off becoming a political quack than a medical or scientific quack.